Court File and Parties
Court File No.: 2487/17 Date: 2019-04-09 Ontario Superior Court of Justice
In the Matter of the Estate of Bernice Mae Lyons, deceased
Between: ROBERT BRUCE LYONS, Applicant – and – VICTORIA BERNICE TODD, in her capacity as the Estate Trustee (with a Will) of the estate of BERNICE MAE LYONS and in her personal capacity, MARILYN LOUISE CESFKO, JOHN KENNETH LYONS, SAMANTHA RYAN and DYLAN LYONS, Defendants
Counsel: Sharon D. Davis, for the Applicant M. Jasmine Sweatman, for the Defendant Victoria Bernice Todd
Heard: December 17, 2018
Reasons for Decision on Motion
CHOZIK J.
Overview
1The defendant Victoria Bernice Todd (“Victoria”) brings a motion for costs to be paid personally by the Applicant, Robert Bruce Lyons (“Bob”) as a result of his now abandoned challenge of the Will of their mother, Bernice Mae Lyons (“Mae”). She asks that Bob be ordered to pay costs on a substantial indemnity scale. Bob brings a motion for his costs to be paid out of the estate.
2For the reasons that follow, I have determined that the defendant Victoria is entitled to costs from Bob personally on a substantial indemnity basis. No costs are awarded to Bob. The costs payable by Bob to Victoria shall be fixed at $61,651 plus disbursements and HST.
Background
3Mae died on April 7, 2016. She was survived by four of her six children: the Applicant Bruce Lyons (“Bob”), the Respondents Victoria Bernice Todd (“Victoria”), Marilyn Louise Csefko (“Marilyn”), and John Kenneth Lyons (“John”). She was predeceased by her husband Bruce Arthur Lyons (“Bruce”), her son William August Lyon (“Bill”), and her daughter, Linda May Ryan (“Linda”). She was survived by Bill’s only child Dylan Lyons (“Dylan”) and Linda’s only child, Samantha Ryan (“Samantha”), both of whom are adults, and four other grandchildren.
4Mae’s last Will dated January 21, 2011, (the “Will”) appointed Victoria as the estate trustee. The Will further provided that if Victoria predeceased her or died before the trusts were terminated or if she refused or was unable to act as the estate trustee, then John would take her place. The Will gifted to Victoria the estate’s significant asset, Coral Park Campground (the “Park”) in Campbellville, Ontario. In doing so, the Will expressly noted that Mae took into consideration “the enormous assistance” provided by Victoria to Mae in managing the business as well as “all of the work” she had done and improvements that she had made to the business and the property in Mae’s lifetime. There was no gift over in the Will, such that if Victoria did not survive Mae, the gift went back into residue. Nor was an alternate beneficiary named.
5The Will further provided that the residue of the estate was to be divided amongst Mae’s other surviving children in equal shares per stirpes, or the issue of the deceased’s child. The Will gifted $2,000 to each of Mae’s grandchildren alive at her death. The Will also provided that in consideration for work that Mae’s son John had done for her at the Park, any debts he owed to her on the date of her death would be forgiven and payment waived.
6As it turned out, at the time of her death, the Park was the only significant asset of the estate. More than five years elapsed between the making of the Will in 2011 and Mae’s death in 2016. During this time, Mae suffered from dementia and required increasingly intense care.
7Prior to executing the last Will, Mae underwent a capacity assessment. The capacity assessment makes reference to comments made by Bob that he would challenge the Will if Mae changed it to his detriment. Under a prior Will dated 1991 made by Mae and her deceased’s husband Bruce, the residue of the estate was to be shared amongst the children.
8The capacity assessment dated January 14, 2011, was prepared by Janice E. Mitton. Ms. Mitton met with Mae for over five hours over two meetings in December 2010. Ms. Mitton performed a detailed screening of mental status, tested Mae’s behaviour and memory, general knowledge and probed her relationships with her children, their spouses, grandchildren and asked questions meant to test Mae’s capacity to make a Will. Ms. Mitton also interviewed one of Mae’s best friends Alberta Vanhoeke, obtained the opinion of her family doctor Dr. Chung, and received backgrounds and further information from Mae’s lawyer Stephen Kier.
9According to Ms. Mitton, Mae obtained a score of 29/30 on the Mini-Mental State Examination (“MMSE”). The higher a score the more normal a person’s cognition. Ms. Mitton observed that few people obtain such a high score, and that Mae was alert, fully oriented, and fully cooperative in person and on follow up phone calls, readily forthcoming with information. She stayed on task and was focused. Ms. Mitton was not concerned with Mae drawing a clock where she placed the time 11:10 incorrectly. She observed that there were no signs of any issues with Mae’s mental health.
10Ms. Mitton described Mae as fiercely independent, strong willed, stubborn, and having a “take charge” attitude. Ms. Mitton concluded that there was no sign of Mae being influenced by anyone. That capacity assessment concludes as follows:
Based on all sources of information, but most importantly, based on the interviews with Mrs. Mae Bernice Lyons herself, I am of the opinion that, at the time of my assessment Mrs. Lyons met the above criteria and was capable of signing a Will.
The capacity assessment also stated the following:
Although it is not the role of a capacity assessor to assess for the possibility of undue influence, I would simply comment that at no time during my interviews with her did my observations suggest that Mrs. Lyons is being influenced by others in respect to any of her decisions, financial or otherwise.
11Significantly, Bob had a copy of the 2011 capacity assessment before commencing his application to challenge the Will. On June 6, 2016, he filed an objection to the Will and brought an application for directions. On August 10, 2017, Woollcombe J. issued an Order for Directions on consent. Again, it is significant that the Order for Directions provided Bob with fact-finding tools to advance his challenge to the Will. The Order authorized the parties to obtain medical and financial productions, restrained Victoria from dealing with the assets of the estate and set a timetable for the filing of responding materials and examinations. On the motion before me, it is not disputed that Bob took no steps to obtain any of the medical or financial productions he requested. Instead, this was left to Victoria.
12In October 2017 Victoria responded to Bob’s application with evidence refuting Bob’s allegations. She prepared a Responding Record which includes records from Dr. Chung, Ms. Mitton, Halton Health Care Services, Allendale, Hamilton Health Sciences and the drafting solicitor’s records and financial records. Victoria’s lawyer reviewed these records. Witnesses were interviewed. Affidavits were obtained and a response to Bob’s application was prepared. The Responding Record was served on October 5, 2017, and examinations were scheduled for November 13 and 16, 2017. Victoria’s lawyer prepared for cross-examinations. At the last minute, Bob cancelled the examinations. He then insisted that his examination take place in Calgary. The evidence prepared and filed by Victoria as to Mae’s capacity and validity of the Will remained unchallenged by Bob, yet he did not abandon his challenge to the Will.
13Commencing around November 2017, and continuing for more than a year, Bob made very serious and harmful allegations against Victoria. As set out below, I find that this conduct was calculated to influence Victoria’s response to his stance in the litigation. These allegations were in addition but separate from the allegations of undue influence and misappropriation of funds he made in the formal challenge to the Will. Bob subjected his sister to harassment on social media and by telephone.
14The transcription of voice messages, copies of emails and other social media posts, establish that Bob threatened to make what he described as Victoria’s “perverted” sex life public. He threatened to expose her to the clients of the Park and bankrupt her with the costs of litigation if she did not settle. With some of the Facebook posts, he posted the location of the Park. In many of these communications, he also professed his continued love for her and invited her to settle the litigation. These phone calls, voice messages, emails and social media posts escalated to the point that Bob was charged by Halton Regional Police with criminal harassment and a warrant for his arrest was issued. Clearly, all of the allegations and threats were related to this litigation – they were a heavy-handed attempt to coerce Victoria to settle on his terms.
15Despite the evidence of capacity put forward by Victoria in October 2017, Bob took no steps to move the litigation forward. In February 2018, Victoria secured a long motion date of Monday, June 25, 2018, for a motion to vary the Order of Woollcombe J. Bob did not cooperate regarding vacating the Notice of Objection and so a certificate of probate could not issue. Victoria made a formal Rule 49 offer to settle in May 2018. The offer provided for dismissal of the application with costs fixed at $40,000. Despite the evidence as to capacity put forward by Victoria, this offer was rejected. On June 22, 2018, Bob made an informal offer to pay $5,000 for costs and to make an apology. He then withdrew the counteroffer.
16On June 15, 2018, Victoria served materials for the long motion, responding to the challenge to the Will. The day before the hearing of the motion, on Friday, June 22, 2018, after 4:00 p.m. Bob served a Notice of Abandonment, but it was not in the proper format. He had failed to file a factum, and the motion was struck from the list. All of Victoria’s costs were thrown away.
Positions of the Parties
17It is Victoria’s position that Bob brought the application to challenge the Will in bad faith. He did not have an honest belief that the Will was not valid. He brought the application because he could, and he did so to “rattle” his sister’s case. His “character” is to bully his sister, evidenced by his emails and social media conduct. After commencing the application he did nothing, although he had the tools to explore and do what he needed. This forced Victoria to defend the allegations by putting forward all the evidence she could. Given the nature of the allegations, and the harassment and threats, any reasonable litigant would be expected to expend significant resources responding. As a result, she seeks costs personally from Bob. Her actual costs are $72,529. Victoria seeks indemnity on a substantial indemnity scale, which amounts to $61,651, or alternatively on a partial indemnity scale of $50,770, plus disbursements and HST.
18Bob takes the position that his challenge to the Will was not frivolous or vexatious. Rather, there were sufficient inconsistencies in the capacity assessment to warrant the challenge to the Will. His counsel says that once Bob had all of the information available to him, he chose not to continue with the litigation. He submits that the costs sought by Victoria are unreasonable, as many of the steps taken by her (including the preparation of the Responding Record) were unnecessary. He says that his and Victoria’s costs should be paid out of the estate because there is a public interest in ensuring unsafe wills are challenged. He says that his costs were $30,190.50, plus disbursements and HST. (The costs outline is not clear whether this is the actual costs or costs fixed on a partial indemnity scale.) Bob says all costs should be fixed on a partial indemnity scale.
19Bob takes the position that his conduct outside the application should be given limited, if any, consideration. He says that he is the black sheep in the family, and that he has had long standing emotional and family conflict. He says that he suffers from mental health issues, including bi-polar disorder (although there is no medical evidence of this before me). He offered an apology to Victoria. He does not dispute some erratic behaviour, but says that it stayed outside the courtroom and outside the realm of the application. His wife passed away two days before his mother died. Other family members offered him verbal support of his challenge to the Will, although they did not sign on for the litigation.
The Analysis
20There are three issues to be determined on this motion for costs: (1) entitlement, (2) scale, and (3) quantum.
21There is no real issue that Victoria is entitled to her costs of the abandoned application. Rule 38.08(3) of the Rules of Civil Procedure states that where an application is abandoned or is deemed to have been abandoned, a respondent on whom the notice of application was served is entitled to costs of the application unless the court orders otherwise. The real question is whether she is entitled to those costs on a substantial or partial indemnity basis, whether the quantum claimed for costs is reasonable in the circumstances, and whether those costs should be paid by Bob personally or out of the estate.
22Section 131 of the Courts of Justice Act and Rule 57 of the Rules of Civil Procedure govern costs in estate litigation matters. Rule 57.01(1) provides the factors to be considered when making costs awards, including the principle of indemnity and whether any step in the proceeding was improper, vexatious or unnecessary. In circumstances where a challenge to a Will is abandoned the court must consider the circumstances that gave rise to the initiation of the application and its abandonment and make a costs award that is in the interests of justice and fair and reasonable: see Enerworks Inc. v. Glenbarra Energy Solutions Inc., 2016 ONSC 4291, at para. 45; Oldfield v. Oldfield Estate, [1994] O.J. No. 2529 (Gen. Div.) at paras. 15-22.
Was there a genuine issue with respect to the validity of the Will:
23The decision with respect to costs turns to some extent on whether I accept that there were suspicious circumstances that merited investigation as suggested by Bob. In my view, the answer to this question is “no”.
24Bob alleges in his affidavit sworn December 5, 2018, that Victoria’s closeness to Mae – she managed her property and business and held the power of attorney for property and care – was one of the factors that gave rise to a reasonable suspicion of undue influence. He also states that his family members initially supported his application, but none were willing to participate in the litigation. Some, like his niece Samantha, were angry and hurt that they were left out of the Will. He says that there was no evidence that Mae had any reason not to treat everyone equally in her Will, and no reason to think that she had such issues with the family that she would want to disinherit Samantha, Dylan, Marilyn and John by effectively giving the only asset of value to Victoria alone.
25Bob’s assertions in this regard are clearly contradicted by the statements made by Mae in the capacity assessment. When read together with the Will, Mae’s intentions and reasons are clear. The capacity assessment sets out that Mae regarded the responsibility to care for grandchildren as that of their parents. The capacity assessment further reflects that Mae felt no need or desire to leave much, if anything, to those of her children who either were well-off financially or whose spouses were capable of looking after their families. In the capacity assessment, and expressly in her Will, Mae made clear that she gifted the Park to Victoria because Victoria has dedicated her life to looking after and helping Mae build that business. When read in context, both documents make clear that Mae did not wish John to run the business with Victoria unless Victoria was unable or unwilling to do so. Mae’s gift to John was that she forgave his debts to her. The capacity assessment reflects that Mae was hurt that John made no effort to repay those debts. Bob relies on snippets of the capacity assessment to make out the foundation of the litigation. When these snippets are read in context, together with the Will, in my view they do not reasonably meet the minimal evidentiary threshold required to challenge a will: see Seepa v. Seepa, 2017 ONSC 5368, at paras. 26-31.
26Bob also says that there was reason to question the Will because Mae had a Grade 8 education, incorrectly drew the hands of the clock at 11:10 during the capacity assessment and may have been suffering from the onset of some degree of dementia at the time the Will was executed. He further says that there is reason to believe Mae did not understand the nature and extent of her property because there was not enough money in the Estate to pay the legacies to the grandchildren. Bob ignores the fact that Mae lived off the assets in the Estate for more than five years after she made the Will. He also ignores the consideration given to these factors in the capacity assessment, and the fact that the medical opinion of Dr. Chung was obtained by Ms. Mitton in the course of that assessment.
27I am of the view that there were no suspicious circumstances or significant inconsistencies when the Will and the capacity assessment are viewed in their proper context that would reasonably warrant a challenge to the Will.
Scale of Costs
28In most cases, costs are awarded on a partial indemnity scale. The function of costs is not to simply indemnify the successful party for the actual costs incurred in the litigation. Costs serve other functions like encouraging reasonable settlement and discouraging unreasonable conduct. Costs on a substantial indemnity scale are generally appropriate only two circumstances: (1) where there has been an offer to settle under Rule 49.10 (an award of substantial indemnity costs are explicitly authorized), or (2) where the unsuccessful party has engaged in behaviour worthy of sanction. “Elevated a costs should only be awarded on a clear finding of reprehensible conduct by the party against whom costs award is made.”: Davies v. Clarington (Municipality) et al., 2009 ONCA 722, at para. 40. The conduct must be “egregious” and deserving of sanction.
29In Davies, the Court of Appeal observed that the “thrust and parry” of litigation generally, which is adversarial by nature, does not warrant sanction even where the litigation turns out have been “misguided”. However, “malicious counter-productive conduct” or the “harassment of another party by the pursuit of fruitless litigation” may merit sanction: Davies, at para. 45. Such conduct may include baseless allegations of wrongdoing or unproven claims of fraud, deceit, or dishonesty against the other.
30The Court of Appeal observed that elevated costs are necessary to ensure that responsibility is taken for unfounded allegations. Character assassination should not be permitted to become a litigation strategy. Parties should take real care before advancing such claims: Mele v. Thorne Riddell, [1997] O.J. No. 443 (Gen. Div.), at para. 9. Costs on a substantial indemnity scale – that are not the result of a rejected Rule. 49 offer – are generally reserved for cases in which the court wishes to display its express disapproval of one party’s conduct: Enerworks, at para. 47; Apotex Inc. v. Egis Pharmaceuticals, [1991] 4 O.R. (3d) 321 (Gen. Div.), at para. 12. Unfounded allegations of fraud or improper conduct may warrant the imposing of substantial indemnity costs: see Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303 at para. 26.
31In my view, the unfounded serious allegations made by Bob against his sister, both in and outside the courtroom, were all prejudicial to Victoria’s character, reputation, and business. Bob alleged misappropriation of Mae’s money, breach of trust, breach of fiduciary duty, and undue influence. He did so with no foundation. Indeed, he did so in the face of the unchallenged capacity assessment.
32Litigants who come before the courts should have some confidence that their case can heard by the court on the merits without unnecessary, gratuitous humiliation and embarrassment. Here, Victoria was subjected to gratuitous humiliation and embarrassment. Bob says that the court should not take this harassment into account, because this conduct was outside the courtroom. I disagree. Bob’s social media posts and threatening voice messages related directly to the litigation. Some of his threats were overtly intended to pressure Victoria to settle. The court cannot ignore or condone this conduct. The bequest to Victoria from her mother should not be eaten away by legal costs defending meritless attacks on the Will.
33I find that Bob’s challenge to the Will was vexatious. It was not brought in good faith. He threatened to challenge the Will to Mae before she even signed it. He followed through on his threat. His conduct outside the courtroom was directly related to the litigation.
34I also find that the steps taken by Victoria in the litigation were reasonable and would have been expected of any reasonable litigant.
35Commencing in January 2017, Bob made several informal offers to settle. None were reasonable or principled. Rather, they appear to be grasping. His first offer was that he get $80,000, Marilyn would get $80,000, and that 80% of the value of the property be shared between Victoria and John, with John getting $320,000. In response to Victoria’s Rule 49.10 offer in May 2018, he proposed that he would pay $5,000 to Victoria for costs and write an apology letter. His lawyer drafted the letter, but Bob withdrew that offer.
36Victoria, on the other hand, beat her Rule 49.10 offer to settle even on a partial indemnity basis.
37I have no hesitation in concluding that the criteria for an award of elevated costs is met in this case. In my view, Bob’s conduct of the litigation was vindictive, reckless and improperly motivated. His out of court communications were clearly connected to the litigation. They were a heavy-handed attempt to coerce Victoria to settle on his terms.
38Bob is not entitled to his costs to be paid out of the estate. Costs have traditionally been payable out of the estate when ambiguity arises out of the actions of the testator, or there are reasonable grounds to question the validity of an aspect of the will. The Court of Appeal for Ontario underlined that courts must look at the conduct of the parties and the reasonableness of the challenge: McDougald Estate v. Gooderham, [2005] 199 O.A.C. 203 (C.A.), at paras. 78-85.
39At para. 85 of McDougald, the Court held that:
The modern approach … recognises the need to restrict unwarranted litigation and protect estates from being depleted by litigation. Gone are the days when the costs of all parties are so routinely ordered payable out of the estate that people perceive there is nothing to be lost in pursuing estate litigation.
40This is especially true in this case, where because Victoria is the primary beneficiary, she would effectively bear Bob’s costs. Even after it was apparent that his challenge of the Will was without merit, Bob did not abandon his application for some time. There was no corroborating evidence to suggest a lack of testamentary capacity or the presence of undue influence. The Will, read together with the capacity assessment, makes clear that there were no inconsistencies in Mae’s instructions. The principle that the loser pays, unless it is the fault of the testator or a matter of public policy, applies in this case.
Quantum
41With respect to quantum, I am obliged to take into consideration the factors enumerated under Rule 57, including the time spent, the results achieved, the complexity of the matter, as well as whether any of the steps taken were unnecessary, vexatious or improper, as well as the principle of proportionality and the reasonable expectations of a losing party: Rule 1.04(1.1), Rule 57.01. The overall objective of fixing costs is to fix an amount that is fair and reasonable for an unsuccessful party to pay, rather than an amount fixed by actual costs incurred by the successful litigant.
42I am also obliged to consider the issue of proportionality. Proportionality is to be considered in the context of the very serious nature of the allegations Bob made, as well as in relation to the complexity of the issues and the length of the proceeding. Although Bob took only minimal steps in the litigation, Bob claims costs of over $30,000.
43There were multiple steps in the proceedings that required the attention of counsel in this case. In addition to the initial application and attendance before Woollcombe J., counsel obtained and reviewed productions of Mae’s health records from multiple service providers, including Dr. Chung, counsel obtained and reviewed productions from the drafting solicitor and other witnesses; prepared affidavits of these witnesses and the factum; researched and prepared a factum and book of authorities regarding the application and costs; made several settlement attempts; and generally made efforts to move the application forward. Counsel spent approximately ten hours between senior counsel, an associate and a law clerk, dealing with Bob’s campaign of harassment and threats. There were multiple attendances required, and preparation for those hearings including an attendance on the long motion in June 2018. These amounted to costs simply thrown away.
44Victoria’s claim of $61,651 is not unreasonable and within the range of what an unsuccessful litigant would reasonably expect to pay. I therefore fix the costs in this amount and order Bob to pay these costs, plus disbursements and HST, forthwith.
Chozik J.
Released: April 9, 2019